Pre-feasibility gives Passendro thumbs-up

A pre-feasibility study for Axmin (AXM-V) on the Passendro gold project in the Central African Republic says a 200,000-oz.-per-year gold mine would be profitable.

The study, by consulting firm GBM Ltd., put the capital cost of the project between US$74 million and US$110 million, depending on whether a mill is built, and pegged cash operating costs near US$200 per oz.

Passendro’s development plan calls for a set of five open pits, feeding either a conventional mill with gravity and carbon-in-leach recovery circuits, or a heap leach complex. The five pits have a reserve of 13.7 million tonnes grading 2.6 grams gold per tonne if the mill option is chosen; in a heap leach operation, which could take lower grade ore, the reserve grows to 15.3 million tonnes grading 2.4 grams per tonne.

In both cases the cumulative stripping ratio of the pits is just over 5.

GBM put the internal rate of return on the project at 41% and the net present value at US$136 million (at a 5% discount rate), based on development of a mine and mill. A heap leach project, with the lower capital cost, showed an internal rate of return of 53% and a net present value of US$145 million.

In a separate development Harmony Gold Mining (HMY-N) will fund a US$4-million program of exploration on Axmin’s Sounkounkou, Sabodala Northwest, and Heremakono permit areas in eastern Senegal. Harmony can earn a 50% interest over three years while Axmin remains the operator.

The permits are in Birimian Kenieba belt rocks on the west side of the Senegalese-Malian border, where reconnaissance exploration by Axmin has outlined a number of geochemical anomalies in soil.

Harmony earns a 10% interest by spending US$800,000 in the first year, a further 15% by spending US$1.2 million in the second year, and US$2 million in the final year to earn another 25%. The 10% interest is extinguished if Harmony does not complete the second year’s obligations.